The federal government's State of Australian Cities 2011 report looks at trends in the nation's 18 biggest cities.
The report shows that young city dwellers are taking longer to fly the nest and highlights how unaffordable housing has become, the group Australians for Affordable Housing (AAH) said.
"The housing affordability crisis has not come about overnight," AAH Campaign Manager Sarah Toohey said in a statement on Thursday.
"It is an entrenched problem that there are a range of solutions for."
She called for the federal government to implement a national housing plan.
"With a federal housing minister, and a national housing plan to address these sorts of trends ... we would be able to make changes to improve our broken housing system," she said.
Ms Toohey said the spike in young people delaying home ownership is putting more pressure on the rental market.
Sydney is suffering the biggest gap between housing supply and demand, although a shortfall of 200,000 new homes is general across Australia, the report says.
The report, released by Infrastructure and Transport minister Anthony Albanese on Thursday, also found city-dwelling Australians are catching more public transport, buying bikes and using less electricity.
It found Melbourne is growing faster than Sydney, with its population expanding by more than 600,000 between 2001 and 2010.
Sydney's meanwhile increased by less than 450,000 over the same period.
And Australians are apparently continuing to move northward, with cities north of the Queensland and NSW border growing faster than those in the south.
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